BP changing company structure

Offshore staff

LONDON -- BP is restructuring. The company will soon consist of just two business segments: exploration and production, and refining and marketing. The current third segment, gas, power and renewables, will be incorporated into the other two divisions.

According to the company, the moves follow a six-month review of the group's operational performance that identified wide-ranging duplication, overlap, and excessive organizational complexity.

"Our problem is not about the strategy itself but about our execution of it," says Tony Hayward, BP's chief executive. "BP's performance has materially lagged our peer group in the last three years. It has been poor because we are not consistent and our organization has grown too complex. At the root of all this is a need to change our behaviors."

Hayward believes the bulk of the competitive shortfall represented revenues lost from impaired US refining capacity and delays to new production in the Gulf of Mexico. The remainder is from BP's higher cost base relative to its rivals.

"What we are doing represents a fundamental shift in how BP works," Hayward says.

10/15/2007